When this 3-year old bank acquired Nigeria’s second oldest bank, people wondered ‘how possible’.
Late last year when most companies were closing out their books, Union Bank Plc surprised stakeholders with the announcement that it was in the process of being acquired by Titan Trust Bank.
In a corporate disclosure that was filed with the Nigerian Exchange on December 23rd 2021, Union Bank announced that the planned acquisition followed a decision by its core investors to divest their 93.41% stakes.
Prior to this announcement, there had been speculations over a possible acquisition of Union Bank. Investigations by some of Nigeria’s leading business news platforms such as Nairametrics all pointed to the fact that Union Bank’s core investors (i.e., Union Global Partners Ltd and Atlas Mara Ltd) were looking for the right buyer so they could offload their shares.
Yet, it did come as a huge surprise when eventually they chose Titan Trust as the right buyer, out of all the potential buyers in Nigeria and elsewhere.
By now, you are probably wondering why it is really so surprising that Titan Trust Bank acquired Union Bank. Well, let’s break it down for you. First, Union Bank is a 105-year old bank and the second oldest in Nigeria. It has a significantly large asset size of about $4.9 billion (N2.59 trillion), according to its FY 2021 audited financial statements.
On the flip side, Titan Trust Bank is barely three years. More so, the bank is just finding its feet in the highly competitive Nigerian banking industry. As such, some people wondered where it could possibly get the money to facilitate the planned acquisition. Others keenly waited to see whether the acquisition could actually come to fruition.
Two weeks ago, it was announced that Atlas Mara and other core investors in Union have successfully finalised their proposed sale of 93.41% stake. Following the acquisition, Titan Trust Bank quickly took over the 105-year old bank, appointed new board members and replaced some top executives. Again, this was an interesting development. And some people were really interested in knowing how the 3-year old bank pulled it off. Where did it get the money?
On June 6 2022, the African Export Import Bank (Afreximbank) announced that it had disbursed the sum of $300 million to help complement the total amount needed by Titan Trust Bank to finalise the acquisition of Union Bank. Afreximbank noted that said fund was disbursed under its Intra-African Investment Financing Facility.
It’s interesting to note that all the companies involved in this deal have not exactly disclosed how much it had actually cost Titan Trust to acquire Union Bank. As we pointed out earlier, Union Bank had a total asset value of $4.9 billion as of December 2021. So, even with the $300 million from Afreximbank, a lot more money would have still been needed to facilitate the deal. And it’s most likely that Titan Trust secured funding from other sources besides Afreximbank.
Also note that Titan Trust Bank is a subsidiary of Tropical General Investment (TGI) Group which has been in existence since 1980.
Union Bank’s former core investors —Union Global Partners Ltd and Atlas Mara — owned 64.98% stake and 25.53% stake, respectively.